Waitomo District Council is being warned its rate take will plummet if the conversion of pastoral farms for the purpose of carbon farming continues at its current rate.
When farms were planted in pine trees, the capital value plummeted as did the rates able to be taken from the property, Waitomo businessman Kyle Barnes told councillors in a submission to its 10 year plan hearings.
Barnes told the council New Zealand Carbon Farming (NZCF) was buying or leasing farmland for "carbon sinks" - a reservoir that absorbs carbon.
Trees planted were not for harvesting as timber, but made money for the owners through the accrued carbon credits.
A carbon credit was equal to one tonne of CO2, or $37.30 at 1 June, with the trees sinking carbon at a rate of 4.5 tonnes every minute of every day, according to the NZCF website.
New Zealand carbon prices were expected to increase as major polluters offset their emissions.
Planting sheep and beef farms in pine trees significantly affected the rates paid to Waitomo District Council.
Figures provided by Federated Farmers showed a big loss in rates when the land use changed. For example a $9 million capital value drystock farm would pay $13,000 toward the district roading rate.
A similarly sized forestry block would pay $654 for the roads used by log trucks servicing forestry blocks.
When NZCF bought a farm, it sold the farmhouse and buildings so the land was rated as non-productive farmland. Trees were not included in the land's rateable value, according to the Rating Valuation Act.
"The rates take is less, which shifts the rate burden to everyone else," Barnes said.
"Another two farms just sold recently for carbon farming. As the [carbon] price rises sheep and beef farmers won't be able to compete. It could have a huge effect on our community."
Beef+LambNZ commissioned a report on a 1000 hectare property similar to the 1274ha Putaki former sheep and beef farm near Waitomo which recently listed for sale at $5.4 million, Barnes said.
A sheep and beef farm that size normally provided 7.4 jobs in the community.
"Once they are planted in trees, those jobs are gone," he said. "Affected jobs, affected income for an area, so once you have got one less shearing gang, all of a sudden the economies of scale start to build up and that erodes pretty quickly."
In a submission focused on reducing rates for farmers, Federated Farmers regional policy manager Dr Paul Le Miere warned council the discrepancy in land valuation between forestry land and pastoral would result in urban ratepayers increasingly asked to pay for the damage created by logging trucks on rural roads.
Currently pastoral farmers paid more than 45 percent of the Waitomo District Council general rate. Pastoral and dairy farms combined paid more than two thirds.
A rural real estate agent who did not want to be named said with the high prices for lifestyle properties at the moment, the new owners could recoup quite a bit of money selling off the houses so the farm could be rated as bare land.
"Just seeing good productive land going into trees doesn't make much sense to me - but these are the guys paying the best money for them.
"The price per hectare they can pay in the first instance just blows the sheep and beef guys out of the water.
"If these guys are getting out and they (carbon) have the best money, what are they supposed to do? If they don't take it somebody else will."
NZCF general manager Peter Casey did not address the concerns raised in Barnes' submission about the impact on rates when approached by Local Democracy Reporting.
In a statement Casey said NZCF employed local people to work year-round on tree and estate management, pest control and enhanced native tree growth.
NZCF's current planting programme in the King Country employed more than 80 people from the region, Casey said.
More than 95 percent of NZCF's 66.7 million trees - including six million native trees - were planted on marginal land, often in steep and erosion prone areas and that NZCF accelerated and supported regeneration.
Any better land, as well as farm houses and buildings, was subdivided from the forestry blocks to be sold back to the local community, Casey said.
Local Democracy Reporting is a public interest news service supported by RNZ, the News Publishers' Association and NZ On Air.